Rayya Co purchases and installs a machine on January 1 2017

Rayya Co. purchases and installs a machine on January 1, 2017, at a total cost of $142,800. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value The machine is disposed of on July 1, 2021, during its fifth year of service 3 Prepare entries to record the partial year\'s depreciation on July 1, 2021, and to record the disposal under the following separate assumptions: () The machine is sold for $71,400 cash. (2) An insurance settlement of $59,976 is received due to the machine\'s total destruction in a fire View transaction list View journal entry worksheet No Date General Journal Debit 1 July 01, 2021 Depreciation expense 71 400 2 mol 2021 Accumulated depreciation-Machinery Machinery 142 800 Gain on sale of machinery 3 July 01. 2021 Cash Loss on disposal of equipment 42.800 Machinery

Solution

Date

General description

Debit

Credit

Journal entry for recording partial depreciation in the year 2021

July 01 2021

Depreciation expense

8925

    Accumulated depreciation - Machinery

8925

Notes:

cost of machine : 142,800

Life of machine : 8 years

Depreciation per annum : 142800/8 years

Depreciation for six Months : 17850 *6/12

Journal entry for recording the disposal:

Sold machinery for cash $71400

July 01 2021

Cash

71400

Accumulated depreciation - Machinery

80325

     Gain on sale of Machinery (Bal fig)

8925

     Machinery

142800

Notes:

Depreciation for four years : 17850*4

71400

Depreciation for Partial year 2021

8925

Accumulated depreciation

80325

An insurance settlement received due to machine total destruction on fire

July 01 2021

cash

59976

loss of fire (bal. figure)

2499

Accumulated depreciation

80325

    Machinery

142800

Date	General description	Debit	Credit
Journal entry for recording partial depreciation in the year 2021
July 01 2021	Depreciation expense	8925
	Accumulated depreciation - Machinery		8925
	Notes:
	cost of machine : 142,800
	Life of machine : 8 years
	Depreciation per annum : 142800/8 years
	Depreciation for six Months : 17850 *6/12
Journal entry for recording the disposal:
Sold machinery for cash $71400
July 01 2021	Cash	71400
	Accumulated depreciation - Machinery	80325
	Gain on sale of Machinery (Bal fig)		8925
	Machinery		142800
	Notes:
	Depreciation for four years : 17850*4	71400
	Depreciation for Partial year 2021	8925
	Accumulated depreciation	80325
An insurance settlement received due to machine total destruction on fire
July 01 2021	cash	59976
	loss of fire (bal. figure)	2499
	Accumulated depreciation	80325
	Machinery		142800